Wharton MBA for Executives

In business school, it seems like many of the cases involved Southwest Airlines, Toyota (their production system, kaizen, etc.), WalMart, and a other companies.

We studied Southwest Airlines a few weeks ago and discussed their various strategic advantages. These include point to point (instead of hub and spoke), faster turnaround at the gates, no assigned seating, no food, teamwork, etc. The key is faster turnaround at the gates because the more time that the plane is in the air, the more money the company makes. I’m not exactly sure how safe it is for a plane to flight all day long like that but other than some minor safety violations, they seem fairly safe. In the international market, I believe that airlines are required to let their airplanes rest for a bit before long hauls (you can’t just make a plane fly back and forth from LA to Singapore all day every day).

My first Southwest Airlines flight was in 1991 when I was in college going from Oakland to Los Angeles. I paid $19 for that flight. A taxi to the airport would have cost more than that. Greyhouse, Amtrack, etc. were all more than that. Heck, gas would have cost more than that if I drove.

I fly Southwest for school every other week so I’ve become very comfortable with Southwest. I am familiar with all of their policies and I know all of the little games that I can play. For example:

1) I’m on the A-List so I always get a good A number for boarding but before that I always made sure to check in online early to get my boarding pass.

2) If I have a late B number and I want to have a Southwest First Class seat (a window or aisle with nobody in the middle), I walk towards the middle of the plane and grab a window/aisle where the other window/aisle is being used by an extremely heavy set person. Most people go to the back instead of middle to get overhead bin space. Most people will skip our middle seat because of the inconvenience caused by my new heavy set friend.

3) If I have a late B number and there are no more window/aisle seats left, I play “unite the couple.” I look for an obvious couple who is sitting window/aisle and ask to sit in their middle. One person usually slides over to the middle so that I can get the window or aisle seat.

4) I always drink Cranberry Apple juice. But sometimes if I feel like it, I will have a Monster energy drink.

5) The honey roasted peanuts are tasty.

6) Southwest does not charge for change fees so I book a bunch of flights, use the one I need, and book more flights with the credit with the flights I didn’t use. For school I book the 4:30 and 6:00 flights. If I can make it to the 4:30, great. If not, I just take the 6:00.

7) Sometimes I’ll book a 5pm flight knowing that chances are low that I’ll actually make it. But with their “flat tire” rule, I know that Southwest will let me go standby for no charge on a later flight (within reason…usually about 2 hours).

8) Sometimes if the 6pm flight is more expensive than the 5pm flight, I’ll just book the 5pm and use the “flat tire” rule to hop onto the 6pm flight. Of course you want to make sure that the 6pm isn’t going to be full flight (but there are ways to know that too).

9) I’ll use my free flights (after 8 round trips) to go somewhere really far to maximize their value. Southwest flies to such far out and exotic places as New York, Orlando, Chicago, Boston (via Providence), Washington DC (via Baltimore), etc.

10) Or sometimes I’ll decide to stay up in SF after class over Saturday night and leave the next day. Rather than paying full fare, I’ll just use one of my free tickets to fly back home.

However, this past weekend, I flew Northwest. Everything seemed so ancient. My riding companion and I didn’t even have seats until we got to the gate because the flight was sold out full. They gave us seats but we weren’t together. We had to board late because they were boarding from the rear of the aircraft first. When we finally got onboard I was able to talk my way with my seat neighbors to shuffle seats so that I could sit next to my riding companion.

There were drinks and biscotti but they were selling chips, sandwiches, salads, etc. for cash so there was dirty cash and dollar bills being exchanged (Southwest is all cashless so it’s credit card or drink coupons only).

The seats on the airplane were small, narrow, hard, and uncomfortable. The flight crew gave their instruction in a slow, draw out, and bored manner (Southwest flight attendants are usually cheery and some even practice their standup comedy routines).

I flew Northwest because they were the only nonstop flight to Detroit. I would probably fly them again if I had to but I’m happy going back to Southwest.

RVD.

I spent this past weekend in Michigan. Many of my friends don’t realize this but I actually grew up in Michigan. I went to elementary and middle school out there in a suburb of Detroit called Southfield, MI. It was a great place to grow up because there were parks everywhere, bike paths, etc. I loved growing up over there. It was a fairly typical middle working class Jewish and Chaldean (Iraqi Catholic) neighborhood. We were the only Asian family on the block (although later we did discover that an Indian family lived down the block). I moved away from Michigan when I was 13 so it’s been a lot of years (20+ years) since I’ve lived there. However, I do enjoy going back every few years or so for random events.

It’s no secret that the current economic crisis has hit Detroit especially hard. GM, Chrysler, Ford, and their suppliers are the backbone of the Detroit economy and these companies are being permanently altered.

Almost all of my friends are gone. Most of the moved to Chicago but a few are scattered all over the place like Cleveland, Cincinnati, Austin, New York, etc. There are 3 of us (including me) who made it out to the West coast but 1 of us recently moved down to Arizona.

I went back to visit my old church. Back in 1984, it had about 300 active members. The church had then seen a lot of growth so they constructed more buildings, expanded the parking lot, bought more buses, etc. But they’ve seen a recent decline in membership and they’re down to about…350.

As far as I can tell, there’s 1 guy that I used to know that still goes there. I didn’t get a chance to actually see him though (I didn’t see him around). There are about 3 adult couples (my parent’s friends) that are still there. Everyone else is gone…moved on to greener pastures. The Pastor spoke about the economic turmoil and how he hopes it gets better. Overall, the mood was very down.

The church

I drove through my old neighborhood and saw the small house that I grew up in. We bought that house (financed through a bank mortgage of course) for $50,000 back in 1977. We sold it for $62,000 in 1985 when we left. The house looked a little different (owners got rid of the bushes in front, added awnings, added a cover to create a carport) but overall, it was the same house. The street looked pretty much the same now as it did in 1985. And that old house sold last year…for $60,000.

My old house

Our street

The old movie theatre in the nearby town of Berkley where I used to watch late run movie for $1 was closed down. The old Berkley Book Store that one of my best friend’s dad owned was gone. But my old favorite pizza place Sila Pizza was still there, my old favorite chinese takeout Kwang’s Carry Out was still there, and the ACO hardware store down the block was still there.

Berkley Movie Theatre

Kwang’s Carry Out

Sila’s Italian Restaurant

The old public library was converted to a city municipal building but next to it was a brand new shiny big public library.

The new public library

I met a woman from Flint, MI and asked her how things are over there. She simply sighed and said it’s bad…really bad. According to her, Flint is the worst city in the entire country when it comes to the economy. She said that about 25% of the city is unemployed. Some areas have become like ghost towns since the factories started closing. GM closed more factories recently so she said what was already worst in the country got even worse. She’s afraid that the entire city will basically shut down. It’s bad…

The US automotive industry has been in trouble for years (in my opinion due to the un-American union, the UAW but that’s another story) and this recession has hit them HARD. It was tough for me to see my hometown in that much trouble.

When I was growing up, the streets were filled with good old American cars. Even today, it’s nothing like California but there were a good numbers of import cars around town. Even Michiganers stopped supporting US cars.

I flew back today, got into my Chrysler automobile, and went to work.

Although I don’t personally use a tutor and I haven’t been to any of the official Wharton tutoring sessions (although I hear that Nick is just AWESOME!), it looks like there’s a service out there that caters to graduate student tutoring. They specialize in MBA, CFA, and CPA tutoring and the service is called http://www.graduatetutor.com/. If anyone tries out there services, I’d love to hear back with your opinion about how effective they are.

I think what makes them particularly interesting is that they focus on tutoring for specific course in MBA and EMBA programs around the country. So instead of simply getting a microeconomics tutor, you will get one that knows all about that specific microeconomics class at MIT, Columbia, Cornell, UCLA, Emory, etc. Of course they also have general tutors as well that can adapt to most college classes.

I don’t see any specific Wharton courses offered but there may be some in there.

If you’re getting too many LTs, it wouldn’t hurt to try them out. Tell them that RVD sent you from whartonblog.com and they’ll treat you well…

This past Sunday morning I went to SFO to fly back down to LA. There was a decent line for security although it wasn’t too crazy. It looked like maybe a 15 minute line or so. But no worries for me, the CLEAR line was open so I walked over there and showed the CLEAR employee my card. She smiled, closed off the CLEAR booth (she was the only one working - her co-worker was taking a break), and walked me over to a kiosk. I inserted my card, pressed down my left index finger, and was cleared to go.

The lady walked me over to the front of the line, grabbed 2 bins for me, helped me put my laptop in one of them, got me set up on the conveyor belt, and said good-bye. I was on the other side within 3 minutes.

However, last night I was on facebook and saw “Miri…is out two benjamins for the now-worthless Clear Card” and thought WHAT?! No more CLEAR? You mean I have to actually stand in line with the rest of the riff raff? Ugh…I enjoyed being walked to the front of the line while everyone else stared at me and I waved and blew kisses at them as I strolled past their dreary line-waiting bodies!

I then went to flyclear.com and saw:
“Clear Lanes Are No Longer Available.

At 11:00 p.m. PST on June 22, 2009, Clear will cease operations. Clear’s parent company, Verified Identity Pass, Inc. has been unable to negotiate an agreement with its senior creditor to continue operations.”

A few hours later, I received an email from CLEAR telling me that they have ceased operations and that their lanes would no longer be available.

From my limited knowledge gained from Finance 738 (Funding Investments), it looks like Clear has filed (or is filing for) chapter 7 bankruptcy. They must have been doing really poorly. Otherwise, they would have filed for chapter 13, kept their door opened, and renegotiated their debts (redo some of their absolute priority, bring in some more senior (maybe supersenior) debt, etc.). Usually a firm is still worth more with their doors opened than closed so a current senior creditor may be willing to go lower in priority rather than get much less (few cents to the dollar perhaps) in bankruptcy court.

Anyway, I don’t remember how much I paid but I signed up for CLEAR when I enrolled in the Wharton program so it’s been a little over a year for me. I got a free one year extension through SPG (as a platinum member). I just checked a found my old post here: http://www.whartonblog.com/?p=67 (it looks like I paid $128 last year). I did notice a few things about the program:

1) It always seemed like I was the only CLEAR member around when I went to the airport. These employees spend most of their time standing around doing nothing.
2) $100+ for membership for a year is a lot of money during a down economy. It’s discretionary spending that most Americans will not spend.
3) Corporate travel is also way down because of the economy.
4) Most corporations did not pay for CLEAR membership for their employees and most employees aren’t willing to shell out their own money even if it saves time.
5) CLEAR makes sense if you travel a lot and the airports to travel from participate in CLEAR. However, if you travel a lot you probably have elite status with the airlines so you have special lines anyway. Heck, even Southwest has their A-List (although not enforced much) that lets you bypass some of the lines. In fact, I used my A-List card more often than my CLEAR card because on Saturday afternoons, OAK’s CLEAR stations are usually closed.
6) They tried partnerships (e.g. SPG for platinum members) to try to get people hooked on the service so that they would renew. I think it was a good strategy but they needed to have enough money to stay solvent during the free membership period.
7) Not enough airports had CLEAR. They were not in the Southern California market.

In summary, I’m sad to see the service go but I can’t say that I’m surprised.

On Friday we went bowling at Yerba Buena. It was a fun night with pizza, libations, strikes, spares, gutter balls, high scores, and low scores. We did find some interesting hidden bowling talent in the class.

Thanks to Brandon for the pictures.

Turns out Hunt is a ringer…

“N” who shall remain pictureless scored a 67. Over/under for him was 50. He was at 13 after frame 5 so the unders were pretty happy early on. His 2 spares later on brought him over (especially the spare in frame 8). You can also see Hunt’s 5 consecutive strikes followed by 2 spares to get his jaw dropping 196!

This was the rowdy party lane

The group shot.

We all had at least 1 exam this past session with most students having 2 exams and some even having 3 exams! I had 2 exams (both on Friday) so Friday was kind of a long afternoon/evening.

We celebrated on Saturday after class by going out for Hawaiian food ($5 specials on Blue Hawaiian had the potential to get dangerous but we were responsible) and then going out to late night karaoke. It was a blast and a great end to the weekend.

RVD.

A few weeks ago, there were a series of Dilbert cartoons poking fun at MBAs :-) I probably can’t post them directly in the blog for copyright reasons, but here are the links:

http://dilbert.com/strips/comic/2009-05-18/

http://dilbert.com/strips/comic/2009-05-19/

http://dilbert.com/strips/comic/2009-05-20/

http://dilbert.com/strips/comic/2009-05-21/

http://dilbert.com/strips/comic/2009-05-22/

http://dilbert.com/strips/comic/2009-05-23/

Proposition 8 was a controversial and hotly contested California ballot proposition in the 2008 election. The proposition was to add a new section to the California state constitution stating that “Only marriage between a man and a woman is valid or recognized in California.” This essentially meant that California would only recognize opposite sex marriages and would not give the rights for same sex couples to marry.

Regardless of whether you were for or against the proposition, what happened after the election was interesting. But first let’s start from the beginning…

Typical American voters simply read the title of the ballot measure and make their decision to vote yes or no. So the title of the measure is probably more important than the measure itself. This is why a phrase like “reduce spending for medicare” can quickly become “let sick kids die.”

As a result, the supporters of the proposition initially called the measure “California Marriage Protection Act.” That sounds pretty good doesn’t it? It’s usually a good thing to “protect” something like “protecting” freedom, “protecting” our rights, “protecting” our children, etc….so many people will vote yes. I’m all for protecting things.

The opponents of the measure didn’t like that so it changed to “Limit on Marriage. Constitutional Amendment.” That doesn’t sound sexy does it? “Limit” is a bad thing. Nobody wants a “limit” on their freedom, etc. so many people will vote no. I vote “no” if it means I’m going to limit something.

In the end, Attorney General Jerry Brown changed the title to “Eliminates Rights of Same-Sex Couples to Marry. Initiative Constitutional Amendment.” Proponents did not like this because “eliminates” is such a negative word. If you ask me to vote on a measure that “eliminates” something, it sounds pretty bad to me so I may be inclined to vote no. I hate eliminating things…

Of course in our litigious society, proponents of the measure did object and the California Superior Court had to decide that it was an ok title to use for the ballot.

So now the proposition was set to hit the ballot.

And this is where the campaigning began. It was such a hot topic that over $83m was raised ($40m for and $43m against). Second to the presidential contest, this proposition was #2 in terms of campaign contributions in the country. I remember seeing people on the streets with posters saying “VOTE YES” on one side and people yelling “VOTE NO” on the other side. Usually the vote YES side had families and kids helping them campaign. The vote NO side just had lots of angry looking people (and some young student types that reminded me of my days at Berkeley).

Well, the voters came and went and the proposition passed. No same sex marriage for you.

Usually this is the end of the story. Lots of people fought, nobody could really get along, lots of groups rallied and fought for their votes, and in the end the voters voted and the constitution was changed.

Yet, in this story, it wasn’t over. The losing party didn’t like the election results so they had protests on the streets, filled the internet with protest remarks, and legally filed suit to overturn the election results.

The California Supreme Court did not really know what to do. This was put up for vote and it passed so why would they hear a case to overturn the decision? I guess Gore did that after he lost to Bush in the federal courts but this was different. There was no question about ballots and chads or any type of voter irregularity. The group that lost simply didn’t like the fact that they lost. So the CA Supreme Court asked the Attorney General Jerry Brown for an opinion of whether they should hear these cases (and suspend the measure in the meantime). In the end Supreme Court did accept to hear lawsuits but denied the stay of enforcement. The primary argument was that the proposition was in violation of the state’s equal protection clause. In the case, it was argued that this proposition was in violation of the state’s equal protection clause.

However, as expected, the Supreme Court ruled in Strauss v. Horton that the amendment to the constitution was valid and enforceable from the moment it was passed. They also ruled that this proposition was an exception to the equal protection clause.

There was one dissenting judge (Associate Justice Carlos Moreno) who stated that he believed that proposition 8 did violate the equal protection clause.

So the California Supreme Court ruled that the decision stands.

Of course the story is still not over. When you lose in state court, you can move up to the federal courts. So there is another suit filed in Orange County’s district court that argues that Proposition 8 violates the US Constitution equal protection clause (Smelt v. USA).

My thoughts:

1) Regardless of whether you support the proposition or not, this proposition was put up for vote on the ballot. This is why propositions are put up for a vote. Why put it up on the ballot if it’s unconstitutional? Why go through the hassle of putting it up for a vote if the losing party is not going to accept the outcome? If ballots and voting doesn’t mean anything, what’s the point? The reality is that this is the world we live in. We open things up for vote and at the conclusion of the vote, the losing party tries to fight with litigation to get the decision overturned.

2) The courts are not going to overturn this decision. You don’t put up a proposition for vote only to have the courts decide on the outcome. If you wanted to do that, you wouldn’t put it up for vote in the first place. You’d simply fight it out in the courts and have the judges decide. I don’t think the vote No people realized that it wouldn’t pass.

3) Lawsuits will continue to be filed but I don’t think the US Supreme Court will actually hear any of these cases. This is a State matter and the California Supreme Court has already made their decision. It will not be overturned.

4) Legal Studies is fascinating…NOT.

It looks like a lot of us have finally booked our tickets to Spain. I booked my ticket a few days ago. Because of the global recession, plane tickets are CHEAP! My round trip ticket from LAX to Madrid was only $523. I remember when it used to cost that much to fly to NYC. I remember when a last minute ticket to NYC would cost $1500 before 9/11.

Most of us are taking some side trips before or after our official class activities. Some are going to Greece. It looks like many of us are meeting up in Barcelona the weekend before the class meets in Madrid. I’ll be going to Morocco for a few days and Barcelona.

The class trip also unofficially makes the end of the program. Sure, we have another 8 months left after September but I think everyone starts to kind of “check out” after the trip.

We finished our legal final this past Saturday. The exam was long…3 hours and 50 minutes long including essay questions, multiple choice, etc.

I used to think that multiple choice exams were usually not too hard because after all, the answer is in front you and you just have to pick the right one. However, like most students at Wharton, I had a new respect for multiple choice when we took our OPIM final and saw questions with answer choices going from like a…to j! WTF?

The legal final wasn’t that bad in terms of number of choices but the exam was brutal.

Do I feel like a lawyer? Heck no, I just know that I need to hire good counsel.